Monday, February 13, 2012

It's Africa, Stupid

A recent article in the Economist documents African nations increasing demand for a share of the mining profit pie, through higher rents and bigger ownership stakes. Seems only fair to me. The colonial powers managed to pull a major smash and grab operation on that continent for quite some time. Indeed, some truly shameful history has gone on down there, Belgium (Congo) and Portugal (Angola) being two of the worst offenders. These two countries by no means had a monopoly on despicable behavior, but they certainly had respectable franchises on it.

Africa may not be the last frontier in terms of resource exploitation - Antarctica still awaits - but they do possess largely untapped and undeveloped mineral and energy resources. In the book "Untapped: The Scramble for Africa's Oil", I recall reading a passage about how, during a casual geophysical exploration of the continent during the 1950s, there was rarely a drill test site that did not run into oil. There are also vast mineral deposits still untouched. As to how all of this will be developed, it is hard to say. One cannot imagine the even more precious biological resources of Africa (plants, animals, and ecologies - all disapearing at an alarming rate) remaining unaffected by this. A lot of the mineralogical treasure is due to continental drift and tectonic churn. Much of the geology consists of immensely old craton formations, which have several billion years worth of erosion to deposit any number of heavy, rare, and precious metals throughout the continent. It is estimated that, for example South Africa alone contains some $2.5 trillion worth of gold remaining in the ground, and the magma formation that holds all of this gold extends straight on up both coasts for thousands of miles. If all of the gold were extracted at once, the price of gold would plunge to pennies per ource. But, given that currently each ounce of gold extracted results in anywhere from 20-80 tons of waste materials, not to mention soil and aquifer degradation and poisoning, one wonders what the real price is.  And that's just one of major ore deposits waiting to be dug up. And then there are all the fossil fuels...

I recently read how Norway is joining into a series of development partnerships with the Republic of Tanzania. It's nice that one of the world's most fortunate countries (ranked 2nd in GDP per capita) is providing humanitarian aid, but I also can't help but think that there is a profit motive involved as well. The Norwegians realize that, despite tapping only perhaps a third of their proven North Sea oil reserves, they will eventually run out of oil. And given their near superlative knowledge of offshore extraction, they wish to export their knowledge economy to other nations. Norway is courting places like Brazil, Vietnam, Ghana, to name a few.

I probably should not be so cynical about this, though. 

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